Morris Goldfish, the son of a Jewish immigrant family living on Delancey Street in New York's East Side, resides with his father Julius, a pushcart pot salesman; his mother Tilda, who toils in the kitchen all day long and resents her husband's laziness; and his sister Birdie, who is in love with their neighbor Eddie Lesser. Julius' favorite child is Birdie, while Tilda's favorite is Morris, who, she believes, will grow up to be a very successful businessman. Morris fights with his sister and then with Eddie over a piece of bread that his mother promised him for being a good son and making some money selling newspapers. The fighting results in an accident which sets their apartment ablaze, but Morris proudly tells his mother that he was able to salvage some valuables that they can now sell in a fire sale. Many years later, Tilda's prophesy is proven true when Morris makes a fortune as a successful Fifth Avenue antique dealer and is able to move his family into his swank uptown apartment. Tilda is comfortable in her new surroundings, but Julius is lonely and Birdie misses Eddie, now her sweetheart. Both admit that they are "a couple of Goldfish in the wrong fishbowl," and complain that they don't laugh anymore. Julius' pride is hurt when Morris announces that he has changed his name to Fish in order to ease his assimilation into Park Avenue society. When Birdie claims that Morris has moved his family in with him only to protect his image, Morris upbraids her for her insolence and reminds them that they should be grateful that he saved them from squalor. Morris forbids Eddie to visit Birdie, but Eddie manages to see her long enough to plan an elopement with her. Before the rendezvous takes place, however, Eddie unwittingly becomes an accomplice to a jewelry store robbery and is forced into hiding. After a detective shows up at Morris' looking for Eddie, Birdie finds him at their planned meeting place and succeeds in convincing him to surrender himself. Eddie is jailed, but Morris is furious at the publicity his story has attracted and evicts his poor sister. Morris keeps Birdie's banishment a secret from his parents and intercepts all her letters to them, so that they worry for her safety. Two years later, Julius, fed up with being "jailed" by his own son, sets out to find his daughter, and soon learns that she has had a child and has earned enough money to support herself while awaiting Eddie's release from prison. Julius and Tilda return to Morris', where they are humiliated when their son addresses them as his servants in order to avoid social embarrassment. Unable to continue living under such conditions, Julius packs his bags, but does not get far before he becomes ill. Morris softens at the sight of his father on his deathbed and summons Birdie to be with him, and for a brief moment the family is happily reunited. Following Julius' death, Morris offers to comfort his mother with a trip to Europe, but she refuses and tells him that she is leaving to live with Birdie on Delancey Street, where she belongs.

According to modern sources, half of The Younger Generation was filmed at the Columbia studio with the remainder filmed on a sound stage on Santa Monica Boulevard during the winter of 1929. This was the first part-dialogue sound film for both Capra and Columbia, and there are four lip-synchronized dialogue passages. Modern sources also include Bernard Siegel ( Kruger ) and Walter Brennan in the cast. The sound cameraman was Ben Reynolds, according to Capra's autobiography, in which he also said that both he and Columbia preferred to make an all-talking film, but sound stages and equipment were at a premium, so all the dialogue scenes had to be shot together.

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